Looking to Tax Saving – Fixed Deposit is the Solution
Tax-saving Fixed Deposit (FD) allows you to make an investment for saving tax under section 80C of the Income Tax Act. But, the tenure for tax saving FD is 5 years. You get a tax-exemption of INR 1.5 lakh minimum.
Features of Tax-saver FD
- Tenure: 5-10 years
- Availability of interest rates: 6.25% p.a. – 8.25% p.a.
- Deposit range: INR 100- INR 1.50 lakh p.a.
Benefits of Tax-saver FD
- Pre-mature withdrawal is allowed only after the completion of 5-year lock-in-period.
- Tax-exemption can be availed as per section 80C of Income Tax Act.
- At most, tax-saving FD comes with an option of the joint account.
- There are some banks that offer a 0.50% hike in interest rates to senior citizens.
- If there is a joint account, the eligibility for tax benefits can be availed only by the account holder.
Eligibility Criterion for Tax-saving FD
- Indian Resident
- Hindu Undivided Families (HUF)
- You can open a tax-saving FD in a single & joint account.
Documents to open a Tax-saving FD Account
- Permanent Account Number
- Aadhaar Card
- Ration Card
- Driving License
- Voter ID Card
- Proof of Age
- Government recognized address proof
- 2 recent color passport size photographs
Tax Deductible on FD
- Individuals and HUF only are eligible to invest in tax-saving FD schemes.
- Tax-saving FDs have 5-year lock-in-period. Loans against the FD and pre-mature withdrawals is not permitted.
- The FD can be of the minimum amount stipulated by the bank.
- The post-office FD are transferable between post-offices.
- FD can either held jointly or individually.
- Tax deductible FD has a nomination facility.
- Banks offer bit higher interest rates to senior citizens on FDs.
- Individuals may invest in these FDs through any public or private sector banks, except rural and co-operative banks.
Things to Know About Tax-saving FDs
As per the tax law, if you are investing in tax saving ED, she/he can claim the invested amount upto the maximum limit of INR 1.5 lakh as a deduction from her/his income. The amount invested this way will be deducted from gross total income to arrive at taxable income. This mentioned kind of deduction is permitted under Section 80C of the Income Tax Act. Also, the tax-saving FD is one of the reliable gateways presently permitted for investment for the person to claim a tax-break.
Only HUFs and individuals can make investment in the tax saving FD scheme. This FD can be put in together with a minimum amount (it varies with the bank). Not to forget, FD has a lock-in-period of 5 years; again, pre-withdrawals are not allowed.
On That Note: Looking to invest? Open an account with Gulaq & start investing in Direct Mutual Funds for FREE. Also, know your KYC for FREE. Get in touch with the team to know more, else you can visit the website: www.gulaq.com.
Also check, For Tax Saving ELSS Funds online
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.